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The Week Ahead – Economic Data, the RBA and the Coronavirus in Focus

A busy week ahead on the economic calendar may have little influence should the spread of the coronavirus continue…
Bob Mason
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On the Macro

It’s another busy week ahead on the economic calendar, with 63 stats to monitor. In the previous week, 58 stats had been in focus.

For the Dollar:

It’s a particularly busy week ahead on the economic calendar.

At the start of the week, the market’s preferred ISM manufacturing PMI numbers are due out alongside the Markit’s finalized figures.

While forecasts are Dollar positive, the devil will be in the details…. The markets will be looking for a pick in new orders and optimism to offset the effect of an ongoing contraction.

The market focus will then shift to factory orders on Tuesday, which precedes a busy Wednesday.

Mid-week, the all-important ISM non-manufacturing PMI is due out along with the ADP’s nonfarm employment change figures for January. Expect the PMI figures to have the greatest impact on the day.

After a busy Wednesday, the markets will the direct attention to labor market figures due out on Friday.

Wage growth and NFP numbers will be the key drivers at the end of the week.

The Dollar Spot Index ended the week down by 0.47% to 97.39.

For the EUR:

It’s also a busy week ahead on the economic data front.

Private sector PMI numbers for Italy, Spain and the Eurozone are due out on Monday and Wednesday. Finalized numbers are also due out of France and Germany.

Expect the Eurozone’s finalized composite to have the greatest influence, though there will be EUR sensitivity to Italy’s numbers…

On Wednesday, Eurozone retail sales figures will also provide direction ahead of German factory orders on Thursday. The retail sales figures will need to come in ahead of forecasts, however, following the slide in German retail sales.

The market focus will then shift to German industrial production and trade figures due out on Friday.

After the ECB’s dovish outlook and better than expected PMI numbers out of Germany, positive stats out of Germany would certainly provide further support to the EUR.

If last week’s IFO Business Climate figures are anything to go by, it could be a tricky week ahead…

Outside of the numbers, the ECB economic bulletin and EU Economic Forecasts, due out on Thursday, will also provide direction.

If Lagarde’s press conference was anything to go by, the reports are unlikely to be too upbeat.

The EUR/USD ended the week up by 0.62% to $1.1093.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar.

As Britain enters its first week outside of the EU, finalized private sector PMI numbers are due out. Expect plenty of sensitivity to any revisions, particularly manufacturing and service sector numbers due out on Monday and Wednesday.

Following last week’s BoE monetary policy decision any material downward revisions could reverse the bet on a BoE hold near-term.

The GBP/USD ended the week up by 1.02% to $1.3206.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

The markets will need to wait until Wednesday for December trade data, which will certainly influence.

While risk sentiment and impact on crude oil prices will also provide direction, the focus will then shift to stats due out on Friday.

January employment and Ivey PMI numbers are due out.

Following the BoC’s forward guidance at the last press conference, the Loonie could be in for a dive should figures disappoint.

While sentiment towards the USMCA and phase 1 agreement are positives, the effect of the coronavirus remains negative.

From elsewhere, private sector PMI numbers and trade data out of China will also draw attention. Positive numbers would likely have a muted impact, however.

The Loonie ended the week down by 0.72% to C$1.3237 against the U.S Dollar.


Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead.

Key stats include manufacturing and building approval figures on Monday, which are due out ahead of Tuesday’s RBA monetary policy decision.

Of greater influence on the data front are business confidence, retail sales, and trade figures due out on Thursday.

Expect any weak retail sales figures to materially weigh on the Aussie.

On the monetary policy front:

While the RBA is expected to stand pat on Tuesday, a near-term rate cut is anticipated. We’re not expecting a hawkish rate statement…

The Aussie Dollar ended the week down by 2.05% to $0.6692.

For the Kiwi Dollar:

It’s a busier week ahead, with key stats including building consents on Tuesday and employment figures on Wednesday.

Expect 4th quarter employment numbers on Wednesday to have a material influence on the Kiwi Dollar.

At the end of the week, inflation expectation figures are also due out, which will also garner attention.

The numbers will have a material influence on sentiment towards RBNZ monetary policy. Expect dire numbers to sink the Kiwi further…

While the numbers will provide direction, the continued spread of the coronavirus will have the greatest impact, however.

The Kiwi Dollar ended the week down by 2.16% to $0.6464.

For the Japanese Yen:

It’s a relatively quiet week on the economic calendar. The markets will have to wait until the end of the week, however, for the numbers.

Key stats include December household spending figures due out on Friday. Following a string of dire numbers, including a slide in retail sales in December, another slide could question the BoJ’s optimism at the last meeting.

Throw in the anticipated impact of the coronavirus and dire numbers could put pressure on the BoJ to make a move.

The real question, however, is whether they have any moves left…

The Japanese Yen ended the week up by 0.85% to ¥108.35 against the U.S Dollar.

Out of China

It’s also a relatively busy week on the economic data front. The market’s preferred Caixin manufacturing and services PMI are due out on Monday and Wednesday.

At the end of the week, January trade data will also provide direction at the end of the week.


Impeachment: The impeachment trial ran its course last week. On Friday, the Senate voted to block witnesses from being called. The vote means that there will be a final vote on Wednesday to acquit the U.S President. Wednesday’s vote follows Trump’s State of the Union Speech on Tuesday, which will also garner plenty of attention.

Trade Wars: With China in lockdown mode and unlikely to meet the terms of the phase 1 agreement, Trump may increase pressure on the EU. Expect any chatter to test the European majors and the EUR. We have seen the EU reluctant to negotiate on much in recent years, such tact may not be as fruitful with the U.S President…

UK Politics: Britain has now officially entered its 11-month transition period. It’s all about trade now. Any early progress in trade talks with the EU and other key trading partners will provide support for the Pound. With few expecting the EU to make it easy,  we can expect some resilience in the Pound for now.

Iran and the Middle East: Nothing to report from the Middle East. That is in spite of a reported 50 troops being diagnosed with traumatic brain injury following the attacks on Iraqi bases. Ongoing monitoring is advised, however, with the melting pot more than able to boil over at any time.

Corporate Earnings

It’s another busy week ahead on the corporate earnings calendar.

From the U.S: Alphabet Inc. (Mon), Walt Disney (Tue), General Motors (Wed), Twitter Inc. (Thurs), are amongst the big names scheduled to release in the week ahead.

Out of Germany: Infineon Tech (Wed) is in focus.

From the UK: BP Plc (Tue), GlaxoSmithKline Plc (Wed) are also scheduled to release earnings results.

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